Cost-of-production Theory of Value and Italian Textile Industry

FILATOI RIUNITI
The Italian textile industry

FILATOI RIUNITI
The Italian textile industry

PIEMONTE : Italy

FILATOI RIUNITI
The Italian textile industry

Step of Cotton Yarn Production
Preparation Opening / Loosening Carding Drawing Roving Spinning Winding Re-spooling Texturizing

Spinning Finishing

FILATOI RIUNITI
The Italian textile industry

Filatoi Riuniti
Family-owned spinning mill in Italy. The company has limited machine capacity and have to outsource for spinning product from six local mills. Milan Consulting Group Inc. hired by the company to solve the optimal solution to meet their customers need and also minimize their cost.

FILATOI RIUNITI
The Italian textile industry

Ambrosi Giuliani Bresciani

Fialtoi Riuniti

Estensi De Blasi

Castri

FILATOI RIUNITI
The Italian textile industry

Ambrosi Giuliani Bresciani

Fialtoi Riuniti

Estensi De Blasi

Castri

FILATOI RIUNITI
The Italian textile industry

(a-b)

Cost of Production Output x Cost per Unit

Cost of Transportation Output x Cost per kg.

Total Cost

FILATOI RIUNITI
The Italian textile industry

(a-b)

COST OF PRODUCTION ($/Kg) Size Supplier Ambrosi Bresciani Castri De Blasi Estensi Filatoi R. Giuliani Extrafine 17.40 17.40 17.50 18.25 19.75 Fine 13.00 14.10 14.22 14.30 13.80 13.90 13.90 Medium 10.65 11.20 11.00 11.25 11.40 11.40 10.75 Coarse 9.60 9.45 9.50 9.60 9.60 8.90 9.40 Supplier Ambrosi Bresciani Castri De Blasi Estensi Filatoi R. Giuliani

COST OF TRANSPORTATION ($/Kg) Size Extrafine 0.30 0.40 0.80 0.70 0.70 0.50 Fine 0.30 0.40 0.80 0.70 0.70 0.50 Medium 0.45 0.60 1.20 1.05 1.05 0.75 Coarse 0.45 0.60 1.20 1.05 1.05 0.75

FILATOI RIUNITI
The Italian textile industry

(a-b)

PRODUCTION ALLOCATION
DECISION VARIABLES Product bought from each supplier (Kg/month) Size Supplier Extrafine Fine Medium Coarse Ambrosi Bresciani 28,000 28,000 Castri 26,000 25,000 De Blasi Estensi Filatoi R. Giuliani Demand to Meet 25,000